Friday, July 8, 2022

How to Tell if a Startup is Ready to Scale

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The preparation of the following areas will help your company be ready to scale:

  • Document management
  • Due diligence
  • Business process management
  • Legal documentation

Let us take a look at some other indicators that your company is ready to go to the next level.

The ‘Ready to Scale’ Indicator

Knowing if you are properly prepared to scale your startup is vital. Scaling before you have your systems, processes and key staff in place can cause significant issues.

The first indicator that can assist you to determine whether your startup is ready to scale is your Net Promoter Score. The NPS measures overall customer satisfaction and their experience with your company. The result from the NPS is a better understanding of your customers’ perception of your product, service, or brand in general.

This type of metric is valuable in a variety of ways. Firstly, the NPS indicates whether your customers are happy with your product or service. Secondly, you will see if you have customers that would recommend your solution to their friends.

How to Implement the NPS

The NPS in its simplest form is a simple survey that can be conducted by using simple software such as Survey Monkey, which have a ready-made NPS option available. NPS surveys are ridiculously simple and ask customers “how likely are you to recommend our company to a friend or relative” on a scale from 0 – 10.

Customers who respond with scores of 6 or less are Detractors – who are either an unsatisfied or unhappy customer. Too many detractors could indicate people are not speaking favourably about your brand in the market.

Those with scores between 7 and 8 are classified as Passive. Passive respondents are generally satisfied with your product or service and are susceptible to switching to an alternative brand.

Lastly, those that indicate a score of 9 or more are Promoters. These customers are passionate and loyal to your brand and will often be the biggest source of growth and brand exposure. Promoters will share your posts, recommend you to their friends and stick up for your company in forums and on social media sites.

Once the data has been collected, the NPS is calculated by simply subtracting the total percentage of the Detractors score from the percentage of the Promoters score and multiplying by 100.

Promoters % – Detractors% x 100 = NPS

After the customer submits their NPS, you should also have a follow-up question that asks “What made you give that score? The customer should be presented with an input box so that they can submit feedback in their own words. This data is especially important and lets you know why they give you the score that they did. This allows you to adjust your business in accordance with that feedback.

Essentially, your ultimate goal should be to make all customers Promoters. More precisely, if your NPS is poor then it may be your first warning sign that you are not ready to scale. You must take your NPS very seriously.

Read this article: How to scale a startup.

Ben Waldeckhttps://benwaldeck.com
Ben Waldeck is a Tech Lawyer and Author of the book Start-Up and Scale.

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